<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999.
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number 1-13995
CHICAGO TITLE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 36-4217886
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
171 North Clark Street
Chicago, Illinois 60601
(Address of Principal Executive Offices and Zip Code)
(888) 431-4288
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
21,829,702
(As of March 31, 1999)
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
CHICAGO TITLE CORPORATION
Consolidated Balance Sheets
March 31, 1999 and December 31, 1998
(In thousands, except share data)
<TABLE>
<CAPTION>
(UNAUDITED)
ASSETS MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
<S> <C> <C>
Cash on hand and in banks $ 41,924 $ 39,230
Cash pledged to secure trust and escrow deposits 202,162 93,887
Marketable securities, available-for-sale:
Fixed maturities, at fair value (amortized cost of $1,012,760 and
$1,136,432 in 1999 and 1998, respectively) 1,026,826 1,158,664
Equity securities, at fair value (cost of $35,673 and $33,079
in 1999 and 1998, respectively) 35,048 35,464
----------- -----------
Total marketable securities 1,061,874 1,194,128
Receivables, including accrued investment income, less allowance for
doubtful accounts of $14,504 and $14,072 in 1999 and 1998, respectively 76,651 75,840
Deferred federal income taxes 95,756 89,553
Fixed assets, net 106,592 104,322
Title plants 152,420 151,600
Goodwill 120,518 90,581
Other assets (Note 2) 97,729 42,618
----------- -----------
Total assets $ 1,955,626 $ 1,881,759
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 112,267 $ 112,136
Accrued expenses and other liabilities 160,446 172,253
Bank and other long term debt 21,467 21,648
Reserve for title losses 631,190 618,831
Trust and escrow deposits secured by pledged assets 562,531 495,299
----------- -----------
Total liabilities 1,487,901 1,420,167
=========== ===========
Stockholders' Equity (Note 6):
Common stock-par value of $1 per share, authorized 66,000,000 shares;
issued and outstanding 21,829,702 shares at March 31, 1999 (net of
155,771 treasury shares) and 21,905,685 shares at
December 31, 1998 (net of 20,966 treasury shares) 21,830 21,906
Additional paid-in capital 124,713 127,270
Unearned compensation-restricted stock and employee stock award plans (14,890) (15,573)
Retained earnings (Note 4) 327,336 311,988
Accumulated other comprehensive income (Note 3) 8,736 16,001
----------- -----------
Total stockholders' equity 467,725 461,592
----------- -----------
Total liabilities and stockholders' equity $ 1,955,626 $ 1,881,759
=========== ===========
</TABLE>
See accompanying notes to consolidated quarterly financial statements
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CHICAGO TITLE CORPORATION
Consolidated Statements of Income
For the three months ended March 31, 1999 and 1998 (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1999 1998
-------- --------
<S> <C> <C>
Revenues:
Title, escrow, trust and other revenue $471,810 $385,804
Investment income 16,607 14,805
Net realized investment gains 1,034 371
-------- --------
Total revenues 489,451 400,980
-------- --------
EXPENSES:
Salaries and other employee benefits 153,533 127,603
Commissions paid to agents 172,196 131,490
Provision for title losses 29,817 26,279
Interest expense 1,079 1,295
Other operating and administrative expenses 97,686 82,273
-------- --------
Total expenses 454,311 368,940
-------- --------
Operating income from continuing operations before income taxes 35,140 32,040
Income taxes 11,951 10,799
-------- --------
Net income from continuing operations 23,189 21,241
Net income from discontinued operations -- 4,979
-------- --------
Net income $ 23,189 $ 26,220
======== ========
Basic and diluted earnings per share (Note 5):
Continuing operations $ 1.06 $ 0.97
Discontinued operations -- 0.23
-------- --------
Net earnings per share $ 1.06 $ 1.20
======== ========
</TABLE>
See accompanying notes to consolidated quarterly financial statements.
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<PAGE> 4
CHICAGO TITLE CORPORATION
Consolidated Statements of Cash Flows
For the three months ended March 31, 1999 and 1998 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from continuing operations activities:
Net income from continuing operations $ 23,189 $ 21,241
Adjustments to reconcile net income from continuing operations
to net cash used in continuing operations activities:
Depreciation and amortization 12,715 8,314
Changes in assets and liabilities:
Cash pledged to secure trust and escrow deposits (108,275) (162,992)
Receivables (788) (4,172)
Current and deferred federal income taxes 11,838 9,860
Other assets (55,618) 3,129
Accounts payable and accrued expenses and other liabilities (23,746) (32,391)
Reserves for title losses 12,358 5,495
Trust and escrow deposits secured by pledged assets 67,232 90,850
Gain on sale of investments (1,034) (371)
--------- ---------
Net adjustments (85,318) (82,278)
--------- ---------
Net cash used in continuing operations activities (62,129) (61,037)
--------- ---------
Dividends received from Alleghany Asset Management, Inc. -- 5,300
--------- ---------
Net cash used in operations (62,129) (55,737)
--------- ---------
Cash flows from investing activities:
Purchase of long-term marketable securities (164,395) (103,577)
Sales of long-term marketable securities 125,309 37,257
Maturities and redemptions of long-term marketable securities 86,492 36,255
Net sales of short-term investments 74,147 120,967
Purchases of other invested assets (2,222) (1,747)
Sales of other invested assets 530 558
Purchases of fixed assets (6,783) (7,485)
Sales of fixed assets 584 2,522
Purchases of title records and indexes (51) (225)
Purchases of subsidiaries (Note 7) (35,433) (13,095)
Cash of acquired subsidiaries 1,791 1,736
--------- ---------
Net cash provided by investing activities 79,969 73,166
--------- ---------
Cash flows from financing activities:
Principal payments on bank and other long term debt (181) (707)
Payment of cash dividends (Note 4) (7,453) --
Original issuance and reissuance of treasury stock 1,659 --
Purchases of treasury stock (Note 6) (9,171) --
Cash remaining with discontinued operations -- (2,054)
--------- ---------
Net cash used in financing activities (15,146) (2,761)
--------- ---------
Net increase in cash 2,694 14,668
Cash at beginning of year 39,230 21,219
--------- ---------
Cash as of balance sheet date $ 41,924 $ 35,887
========= =========
</TABLE>
See accompanying notes to consolidated quarterly financial statements
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<PAGE> 5
CHICAGO TITLE CORPORATION
NOTES TO CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
(1) BASIS OF PRESENTATION
This report should be read in conjunction with the Annual Report on
Form 10-K of Chicago Title Corporation (the "Company") for the year
ended December 31, 1998. The unaudited consolidated financial
information included in this report has been prepared in conformity
with the accounting principles and practices reflected in the
consolidated financial statements included in the aforementioned Form
10-K filed with the Securities and Exchange Commission. All adjustments
are of a normal recurring nature and are, in the opinion of management,
necessary for a fair presentation of the consolidated results for the
interim periods. The results of operations for the interim periods are
not necessarily indicative of results for a full year.
Certain reclassifications have been made to the 1998 consolidated
financial statements to conform to the 1999 presentation.
(2) ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1999, the Company adopted Statement of Position
("SOP") 98-1, "Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use," which provides guidance on accounting
for the costs of computer software intended for internal use. During
the first quarter of 1999, costs in progress of $2,074 were incurred
and capitalized for internal system development. These costs are
primarily attributable to the Company's previously announced electronic
spine project.
In June 1998, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS
No. 133 establishes accounting and reporting standards for derivative
instruments and hedging activities. SFAS No. 133 is effective for
financial statements for fiscal years beginning after June 15, 1999.
While the Company is still evaluating this standard, adoption of SFAS
No. 133 is not expected to have a material impact on the financial
position or results of operations of the Company.
(3) COMPREHENSIVE INCOME
Statement of Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income" requires total comprehensive income be
reported in condensed financial statements of interim periods. Total
comprehensive income consists of net income and other comprehensive
income. Other comprehensive income relates to the Company's change in
unrealized appreciation (depreciation) of marketable securities, net of
deferred taxes. The Company's total comprehensive income for the three
months
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<PAGE> 6
ended March 31, 1999 and 1998 was $15,924 and $26,260, respectively.
Other comprehensive income was $(7,265) and $40 for the three months
ended March 31, 1999 and 1998, respectively.
(4) DIVIDENDS
On January 26 and April 28, 1999, the Company's Board of Directors
declared cash dividends of $0.34 and $0.36 per share, payable on March
15 and June 15, 1999, respectively, to stockholders of record on March
1 and June 1, 1999, respectively.
(5) EARNINGS PER SHARE
For the three months ended March 31, 1999 and 1998, earnings per share
on both a basic and diluted basis was $1.06 and $0.97, respectively.
The weighted average number of shares outstanding for the three months
ended March 31, 1999 and 1998 were 21,885,200 and 21,906,651,
respectively.
(6) TREASURY STOCK
In March 1999, the Company's Board of Directors authorized the
repurchase of up to five percent of its currently outstanding shares.
Such purchases will be made on the open market or in privately
negotiated transactions over the next two years and in total would
reach a maximum of 1.1 million shares. The timing and amount of actual
purchases will depend on market conditions and corporate
considerations. This new program is in addition to the Company's
existing stock repurchase plan, which authorizes the repurchase of up
to 2.0 million shares for various employee and director benefit plans.
As of March 31, 1999, the Company held a total of 155,771 shares in
treasury.
(7) ACQUISITIONS
During the first quarter of 1999, the Company acquired the assets of,
or stock in, various companies for a total cost of $35,433. These
acquisitions were accounted for using the purchase method of
accounting.
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<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
Results of Operations--Comparison of Three Months Ended March 31, 1999 and March
31, 1998
Net Income
For the first quarter of 1999, net income was $23.2 million or $1.06
per share on both a basic and diluted basis. This represents a 9.2 percent
increase over net income from continuing operations of $21.2 million, or $0.97
per share on both a basic and diluted basis, for the same period in 1998. For
the first quarter of 1999, total revenue was $489.5 million, a 22.1 percent
increase over the prior year period.
This period marked the beginning of the first full fiscal year of
operations for the Company following the June 1998 Spin-Off from Alleghany
Corporation ("Alleghany"). Exclusive of $0.4 million in after-tax non-recurring
Spin-Off and related management restructuring costs, net income from continuing
operations amounted to $21.6 million, or $0.98 per basic and diluted share, for
the three months ended March 31, 1998.
Prior to the Spin-Off, the Company performed trust and asset management
services through a subsidiary, Alleghany Asset Management, Inc. ("AAM"). This
subsidiary remained with Alleghany after the Spin-Off. Accordingly, the results
of operations of this subsidiary are reported in the Company's statements of
income as discontinued operations. As a result of the Spin-Off, AAM made no
contribution to first quarter 1999 results. Net income from discontinued
operations was $5.0 million, or $0.23 per basic and diluted share, for the first
quarter of 1998.
Operating Revenues
Real estate markets throughout the first three months of 1999 continued
to benefit from favorable economic conditions marked by low levels of
unemployment and the absence of inflationary pressures. These conditions,
combined with relatively stable long-term interest rates and strong consumer
confidence, have resulted in particularly strong residential resale activity in
a period when it normally reaches a seasonal low. New residential refinance
orders have dropped from the peak levels achieved in the latter part of 1998,
but they remain well above average historical levels and revenue from this
sector was quite strong in the quarter. Commercial and industrial ("C&I")
transactions also continue at a healthy level.
Title, escrow, trust and other revenue was $471.8 million in the first
quarter of 1999, an increase of $86.0 million or 22.3 percent from the year
earlier period. Real estate related services revenue rose 30.6 percent to $21.3
million for the first quarter of 1999 compared to $16.3 million for the first
quarter of 1998. For the first quarter of 1999, direct title premiums increased
by $13.5 million, gross title premiums from agents and approved attorneys
increased by $51.3 million, and property information sales and
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<PAGE> 8
escrow fees increased by $8.4 million from the year earlier period. The
remainder of the increase was incurred in other categories.
Of the 1999 first quarter increase in direct title premiums, $13.4
million was attributable to residential purchases, while residential
refinancings and C&I activity remained relatively flat when compared to the same
period last year.
During the first quarter of 1999, 70.2 percent of the Company's direct
title premiums were attributable to residential transactions, of which 43.5
percent were purchase transactions and 26.7 percent were refinancings. During
the first quarter of 1998, 64.3 percent of the Company's direct title premiums
were attributable to residential transactions, of which 37.2 percent were
purchase transactions and 27.1 percent were refinancings. The remaining direct
title premiums for each period were attributable to C&I transactions.
Investment Income
Investment income totaled $16.6 million for the first three months of
1999 as compared with $14.8 million for the same period last year. The increased
level of investment income was attributable to higher levels of investment
assets. Realized gains from sales of marketable securities were $1.0 and $0.4
million on a pre-tax basis for the three months ended March 31, 1999 and 1998,
respectively. The average duration of the portfolio at March 31, 1999 was 2.8
years as compared with 2.4 years at December 31, 1998.
Expenses
COMMISSIONS PAID TO AGENTS. Payment of commissions to title insurance
agents constitutes the largest single expense incurred by the Company. The
commission rate varies by geographic area in which the commission is earned,
primarily due to competitive factors and the level of services performed. The
percentage of premiums retained by agents amounted to 76.7 percent in the first
quarter of 1999 as compared with 75.9 percent in the first quarter of 1998. The
Company reports amounts retained by agents, along with amounts paid to approved
attorneys, as commissions paid to agents in its consolidated statements of
income.
SALARIES AND OTHER EMPLOYEE BENEFITS. This category of expense
represents the cost of salaries, incentive compensation and benefits paid to
employees. One key ratio monitored by management is the amount of these expenses
as a percentage of operating revenue, net of commissions paid to agents. The
following table summarizes this ratio:
-8-
<PAGE> 9
<TABLE>
<CAPTION>
(dollars in thousands) THREE MONTHS ENDED
MARCH 31,
---------------------------
1999 1998
--------- ---------
<S> <C> <C>
Title, escrow, trust and other revenue $ 471,810 $ 385,804
Commissions paid to agents (172,196) (131,490)
--------- ---------
Net revenue 299,614 254,314
--------- ---------
Total salaries and other employee benefits 153,533 127,603
--------- ---------
Percentage 51.2% 50.2%
========= =========
</TABLE>
During the first quarter of 1999 the level of total salaries and other
employee benefits as a percentage of net revenue was 51.2 percent as compared to
50.2 percent for the same period in 1998. Typically, this ratio is relatively
high in the first quarter due to the normal seasonal reduction in real estate
transactions during the winter months. However, reductions in mortgage rates
early in 1998 led to an increase in residential refinance activity and pushed
other real estate activity to higher than normal levels. Since staffing levels
typically lag changes in demand, the ratio of salaries and other employee
benefits as compared with operating revenue, net of commissions paid to agents,
was at an unusually low level in the first quarter of 1998. In the first quarter
of 1999, this ratio returned to more typical levels. During 1999, the Company
will continue to track labor costs and workforce to ensure the appropriate level
of productivity is maintained.
PROVISION FOR TITLE LOSSES. The following table summarizes key
information pertaining to the Company's provision for title losses:
<TABLE>
<CAPTION>
(dollars in thousands) Three Months Ended
March 31,
--------------------------
1999 1998
-------- --------
<S> <C> <C>
Provision for title losses $ 29,817 $ 26,279
Title, escrow, trust and other revenue 471,810 385,804
Ratio 6.3% 6.8%
</TABLE>
<TABLE>
<CAPTION>
As of As of
March 31, December 31,
1999 1998
-------- --------
<S> <C> <C>
Reserve for title losses at period-end $631,190 $618,831
Paid losses, net of recoveries-trailing 12 months 66,401 70,233
Reserve coverage of paid losses-trailing 12 months 9.5x 8.8x
</TABLE>
For the first quarter of 1999 the provision for title losses was 6.3
percent of total operating revenue, representing a 0.5 percent drop when
compared with the provision rate for the first quarter of 1998. This lower rate
is in recognition of a continued favorable trend in the Company's claims
experience.
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<PAGE> 10
OTHER OPERATING AND ADMINISTRATIVE EXPENSES. During the first quarter
of 1999, other operating and administrative expenses increased $15.4 million
over such expenses for the same period in 1998. This increase was split between
various categories including, but not limited to, telecommunications, property
information and contract labor. Excluding pre-tax Spin-Off and related
management restructuring costs of $0.6 million incurred in the first three
months of 1998, operating and administrative expenses increased $16.0 million
between March 31, 1998 and 1999, respectively. The increased level of expense
was primarily related to increases in variable costs associated with the higher
levels of revenue earned in the current year.
Liquidity and Capital Resources
At March 31, 1999, the Company and its wholly owned subsidiary, Chicago
Title and Trust Company ("CT&T") - on a stand-alone basis excluding all other
subsidiaries - had total cash, cash equivalents and marketable securities of
$603.1 million, $567.2 million of which were pledged to secure escrow deposits
and other liabilities. At December 31, 1998, the Company and CT&T - on a
stand-alone basis excluding all other subsidiaries - had total cash, cash
equivalents and marketable securities of $548.4 million, $502.3 million of which
were pledged to secure escrow deposits and other liabilities.
For the three months ended March 31, 1999, the Company's operations
used cash of $62.1 million. For the comparable period last year, a total of
$61.0 million in cash was used by continuing operations activities. The negative
cash flow for both periods is primarily attributable to the timing of activities
related to trust and escrow operations, and cash payments of employee incentives
earned in 1997 and 1998 and paid in the first quarter of 1998 and 1999,
respectively.
The Company continues to expand its direct title operations in high
growth areas and to extend its array of real estate related product offerings.
During the first quarter of 1999, the Company used a total of $35.4 million in
cash for acquisitions. The Company used internally generated funds to finance
these acquisitions. The aggregate gross annualized revenue of these companies is
$43.4 million, and the Company expects each of these acquisitions to be
immediately accretive to earnings.
On January 1, 1999, the Company entered into a revolving line of credit
agreement that provides for borrowings of up to $20.0 million. This agreement is
scheduled to terminate December 31, 1999. No amounts have been drawn, and no
amounts were outstanding under this line of credit as of March 31, 1999.
On each of January 26 and April 28, 1999, the Company's Board of
Directors declared a dividend of $0.34 and $0.36 per share payable in cash on
March 15 and June 15, 1999, respectively, to stockholders of record as of March
1 and June 1, 1999, respectively.
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<PAGE> 11
The Company's common stockholders' equity per share as of March 31,
1999 was $21.43.
In March 1999, the Company's Board of Directors authorized management
to proceed with plans to offer $50.0 million to $75.0 million in debt
securities, depending on market conditions and the need for additional
borrowings. Proceeds from a debt offering, if completed, would be used to fund
future acquisitions, repay existing debt or for general corporate purposes. If
the offering is made to the public, it would be registered under the Securities
Act of 1933, as amended, and would only be made by means of a prospectus.
Also in March, the Company announced a program to repurchase up to five
percent of its currently outstanding stock, or 1.1 million shares, in the open
market or privately negotiated transactions over the next two years. This new
program is in addition to the Company's existing stock repurchase plan. Pursuant
to the new and existing stock repurchase programs, 112,300 and 187,600 shares
had been repurchased as of March 31, 1999, respectively.
Management believes cash generated from operations, investments, and
cash available from financing activities will provide sufficient liquidity to
meet the Company's currently foreseeable needs.
Year 2000 Issues
OVERVIEW. As the year 2000 approaches, many computer systems worldwide
have the potential to malfunction or produce incorrect information due to
programming limitations relating to the storage and manipulation of dates. For
efficiency and to economize storage space, computer manufacturers and software
designers often omitted the first two digits of the year when referring to dates
in their programs. Consequently, if not corrected, these programs will read the
year 2000 (00 according to the computer) as the year 1900. Many programs
utilized by the Company and its subsidiaries use only two digits to identify the
year, and failure to remediate this situation could lead to a disruption in the
business operations of the Company.
In response to "Year 2000" concerns, the Company has adopted a
six-phase corporate plan for itself and its subsidiaries entitled "Planning for
Year 2000" (the Year 2000 Plan). The Year 2000 Plan was designed to help
determine the extent of Year 2000 issues within each of its information
technology and non-information technology systems and to facilitate remedial
action. The six phases of the Year 2000 Plan are: (i) inventory, (ii)
assessment, (iii) remediation, (iv) system testing, (v) implementation, and (vi)
audit. Included within the scope of this plan are centrally developed systems
utilized on a company-wide basis in title plants, title production units, claims
processing, human resources and financial management; decentralized systems; and
systems that function through third-party relationships.
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<PAGE> 12
The Year 2000 Committee, composed of representatives from the Internal
Audit, Information Services and General Counsel's Departments at the Company,
directs and monitors the Company's Year 2000 compliance activities.
Information Technology
INVENTORY AND ASSESSMENT. The Company completed an initial inventory of
its information technology systems in 1997. Evaluations were done of centrally
supported business critical and non-critical systems as well as the integrated
communications between certain systems. This review also covered all equipment
in the central data center, including hardware, software and databases.
Decentralized systems have been identified and evaluated at the local
and regional levels based upon responses to a comprehensive questionnaire
developed and distributed by the Information Services Department (the Field
Office Survey), which requests that field offices determine the business
criticality of any systems that may have been locally developed or acquired.
Field office managers are required to update their responses to the Field Office
Survey on a monthly basis. These responses are being sent to the Internal Audit
Department for review and for use in ongoing audit activities.
The Field Office Survey specifically directs field office managers to
review and report the Year 2000 status of all hardware used in the field
offices, which consists mainly of personal computers (PCs). We have received
certification from all major PC manufacturers of the Year 2000 compliance of
their specific models. Information regarding the Year 2000 readiness of such
models has been posted on the Intranet (which is the Company's computerized
internal communications system). In addition, several software packages have
been identified which test the Year 2000 preparedness of hardware. The field
offices are using such software on all local hardware used in regular business
operations. In order to assure Year 2000 compliance of the software installed on
these PCs, the Company is collecting vendor certifications and conducting proxy
testing of each such program.
Business critical operations which interface with computer hardware,
software or databases of third-party service providers, customers and agents
have been identified. The Company has requested written certification of Year
2000 compliance from key third-party service providers, customers and agents
that interface with its business systems, and continues its efforts to survey
their Year 2000 readiness.
Due diligence efforts for recent acquisitions have included
verification of Year 2000 readiness, estimated expenditures toward Year 2000
compliance and certification of internal and external systems.
REMEDIATION. Modifications to centrally developed and supported systems
are 98.0 percent complete. Modifications to the remaining systems, several of
which are business critical, remain to be completed and are currently scheduled
for completion by the end of the second quarter of 1999.
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<PAGE> 13
As previously mentioned, field offices are being asked to provide
monthly updates on the Year 2000 readiness of those systems developed or
acquired locally. Use of the PC evaluation software on field office PCs may
result in the identification of more equipment that will require replacement. As
a result, additional funding for renovation or replacement of local systems may
also be required. It is expected that this process will be completed by the end
of the second quarter of 1999.
The Company has been receiving information from its key service
providers, customers and agents about their efforts relating to Year 2000
readiness. Although such information generally indicates that the systems of the
Company's key vendors, customers and agents will be ready for Year 2000, there
can be no assurance that such systems will be remediated on a timely basis.
SYSTEM TESTING. Testing of centrally supported applications is 95.0
percent complete. Off-site end-to-end application tests of the data transfer
between integrated business critical systems has been scheduled for May 1999 and
will be repeated in August 1999. Additional testing, where necessary to conform
to Federal Financial Institutions Examination Council (FFIEC) guidelines, is
expected to take place during the first half of 1999 with follow-up testing to
be completed in August. FFIEC guidelines have been adopted by various regulatory
and licensing authorities and are considered by them when performing on-site
audits of the Company. Central documentation libraries are being created to make
test plans and test results more readily available to auditors for these
authorities.
Testing methodologies used for locally developed or acquired systems
have been at the discretion of field office management. The Field Office Survey
continuously requests additional information on testing of business critical
local systems and equipment.
IMPLEMENTATION. Seventy percent of all centrally supported systems
modified to be Year 2000 compliant have been installed and are currently in use.
The remaining systems will be installed as testing and user sign-off is
completed, which is expected by the end of the second quarter of 1999.
Significant hardware purchases for Year 2000 compliance of central systems have
been completed. Additional expenditures for field office hardware may be
required as verification of locally developed or acquired systems is completed.
AUDIT. The final phase of the Year 2000 Plan consists of continuous
monitoring of the Company's remediation efforts. The completion of milestones
and the satisfaction of objectives defined in the Year 2000 Plan provide
checkpoints to assess the status of the Company's Year 2000 readiness. Audits of
central systems and local and regional systems are being conducted by the
Internal Audit and Information Services Departments.
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<PAGE> 14
Non-Information Technology
The Company has completed its inventory and assessment of
non-information technology systems to determine to what extent such systems are
in need of Year 2000 remediation. The Company has identified the operations of
its facilities (elevators, heating and air conditioning units and the like),
office equipment (such as copiers, facsimile machines, telephones and
voicemail), telephone and data lines and the supply of electrical power as
examples of non-information technology upon which the Company is dependent.
However, the Company is not more dependent on these technologies than other
businesses in the United States. The Company has received certifications from
the owner of its headquarters building that the building's systems are Year 2000
compliant.
The Company has not identified any Year 2000 problems associated with
its non-information technology systems that have not either been remediated or
replaced, or scheduled to be remediated or replaced prior to January 1, 2000, or
that are likely to pose any material risks to the Company's direct business
operations.
Costs for Year 2000 Remediation
In respect of remediation of central systems, the Company spent an
estimated $2.8 million through the end of 1998, and expects to spend
approximately $0.9 million in 1999. To remediate local systems, the Company
spent approximately $2.1 million through the end of 1998 (formerly reported as
$1.4 million), and expenditures in 1999 are expected to be about $4.1 million.
The source of these sums is corporate operating funds. The Company does not
separately track the cost and time its own internal employees spend on the Year
2000 project because such costs are principally the related payroll costs for
its Information Services Department. There may be other, non-material costs
which have also not been separately tracked.
Risks Related to Year 2000 Issues
The Company's operations are heavily dependent upon its information
technology business systems. Although not reasonably likely to occur, the
Company believes that a possible worst case scenario could result from a
combination of failures in its business critical information technology systems
coupled with failures in the real estate transaction and banking businesses
generally. The Company believes that such failures could create obstacles to
providing certain services, such as production of title insurance policies,
settlement of real estate transactions and disbursement of funds. In such a
scenario, the Company might be forced to rely on the manual or typewritten
processing of transactions, or, if feasible, to shift processing to other
company systems or third party data processing vendors. Such problems could have
a material adverse effect on the Company's operations in that it could lead to a
decline in its volume of business or an increase in its costs, the extent of
which are not estimable. However, any such failure would be likely to impact
others in the industry as well, and the Company has no reason to believe that it
would be any more adversely affected than other title insurance companies.
-14-
<PAGE> 15
Contingency Planning
In response to the possibility that Year 2000 failures might occur,
contingency planning is in progress at each of the corporate, regional and local
levels. Three types of events demanding contingency plans are identified in the
Year 2000 Plan: catastrophic events, such as failure of the national power grid;
major events, such as telephone or facilities failures; and internal events,
such as failures of specific components of the Company's information technology
business systems.
Contingency plans addressing the foregoing events (other than
catastrophic events, which are outside the control of the Company) are currently
in development. Although it is impossible to plan for every contingency, the
Company is taking steps to identify certain problems which might occur and
prioritizing them in accordance with their relative risk. More complex systems
(e.g., business critical information technology systems and major facilities)
tend to be more high risk, and the Company is focusing on those in its
contingency planning. Systems which have already been tested and found to be
Year 2000 compliant have lower priority in the Company's contingency planning.
For both central and field offices, contingency plans are in
development to provide for the transfer of business operations from a
non-compliant Year 2000 facility to the nearest fully operational facility.
Contingency plans are also in development to allow fully operational systems to
provide alternative data processing capabilities for select systems that
experience failures. The Company is emphasizing compliance of all systems, but
expects contingency planning to be an ongoing function during 1999.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Market demand for the Company's primary products, like that of other
companies within the title insurance industry, is highly dependent upon the
volume of lending activity that is secured by real estate. While the volume of
real estate lending is strongly influenced by general economic conditions, the
level of interest rates (as well as the direction and magnitude of changes in
interest rates) is a particularly important factor. Lower interest rates tend to
improve the affordability of housing and commercial space and therefore promote
higher levels of construction and real estate sales. Lower interest rates also
make the refinancing of existing loans secured by real estate more economically
feasible. Conversely, the increased financing costs associated with higher
interest rates tend to lower the demand for real estate and reduce the amount of
real estate lending. Consequently, the Company's revenue tends to expand in
periods of lower interest rates and contract in periods of higher interest
rates.
The Company's Annual Report on Form 10-K for the year ended December
31, 1998 provides a detailed discussion of the market risks affecting the
Company's operations. Based on the Company's assessments as of March 31 1999, no
material change has occurred in its market risk from amounts disclosed in its
1998 Form 10-K.
-15-
<PAGE> 16
Forward-Looking Statements
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Quantitative and Qualitative Disclosures About
Market Risk" set forth in this report contain disclosures which are
forward-looking statements. Forward-looking statements include all statements
that do not relate solely to historical or current facts, and can be identified
by the use of words such as "may," "will," "expect," "project," "estimate,"
"anticipate," "plan" or "continue." These forward-looking statements are based
upon the Company's current plans or expectations and are subject to a number of
uncertainties and risks that could significantly affect current plans and
anticipated actions and the Company's future financial condition and results.
These uncertainties and risks include, but are not limited to, those relating to
conducting operations in a competitive environment; the effect of fluctuations
in the volume of real estate transactions; acquisition activities; general
economic conditions; the relatively high costs of producing title evidence when
premiums are subject to regulatory and competitive restraints; the effect of
interest rate levels on the Company's investment portfolio; the effect of state
regulations requiring maintenance of minimum levels of capital and surplus and
restricting the payment of dividends; the success of the Company in achieving
Year 2000 compliance; and the risk of substantial claims by large classes of
claimants, such as aboriginal title claims of Native Americans. As a
consequence, current plans, anticipated actions and future financial condition
and results may differ from those expressed in any forward-looking statements
made by or on behalf of the Company.
-16-
<PAGE> 17
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(c) On March 22, 1999, the Company issued 2,527 shares and 2,247 shares
to John P. Lewis and Michael A. Lewis, respectively, in partial
settlement of units granted pursuant to the Company's Performance Unit
Incentive Plan of 1995. These issuances were exempt from registration
under the Securities Act of 1933, as amended, pursuant to Section 4(2)
thereof, as transactions not involving a public offering.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
EXHIBIT NUMBER DESCRIPTION
10.1(a) Termination Agreement effective dated February 16,
1999, by and between Michael Keller and CT&T (the
"Agreement").
10.1(b) List of Contents of Exhibits to the Agreement.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the first quarter of 1999.
-17-
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHICAGO TITLE CORPORATION
Registrant
Date: May 17, 1999 /s/ Peter G. Leemputte
----------------------------------------------
Peter G. Leemputte
Executive Vice President, Chief Administrative
Officer and Chief Financial Officer
(principal financial officer)
-18-
<PAGE> 19
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
10.1(a) Termination Agreement deffective ated February 16,
1999, by and between Michael Keller and CT&T (the
"Agreement").
10.1(b) List of Contents of Exhibits to the Agreement.
27 Financial Data Schedule.
-19-
<PAGE> 1
Exhibit 10.1(a)
TERMINATION AGREEMENT
AND
GENERAL WAIVER AND RELEASE
This AGREEMENT (hereinafter referred to as "Agreement") is made and entered into
effect this 16th day of February 1999, by and between MIKE KELLER (hereinafter
referred to as "EMPLOYEE") and CHICAGO TITLE AND TRUST COMPANY (hereinafter
referred to as "EMPLOYER").
RECITALS
A. EMPLOYEE is currently employed by EMPLOYER as Executive Vice President.
B. EMPLOYER has decided to terminate EMPLOYEE'S employment relationship.
C. EMPLOYER desires to offer EMPLOYEE certain incentives to cooperate and
assist in the orderly transition of his duties.
D. During the course of his employment, EMPLOYEE has become familiar with
certain confidential information of EMPLOYER which is exceptionally
valuable to EMPLOYER and vital to the success of its business.
E. EMPLOYER wishes to protect its confidential information and other
interests, and EMPLOYEE has agreed to the restrictions contained in
this Agreement in consideration of the payments to be made to EMPLOYEE
hereunder.
F. The parties wish to avoid any controversy, dispute or differences or
any litigation between them and wish to fully settle any and all
possible issues, claims or causes of action that have been raised or
could be raised by EMPLOYEE against EMPLOYER, and of fully settling and
compromising any and all issues, claims or causes of action that
EMPLOYEE has, or may have, or may claim to have, against EMPLOYER
arising out of, or in any way related to, EMPLOYEE's employment and/or
termination of employment with EMPLOYER: and the EMPLOYER will waive
claims for certain known actions of EMPLOYEE.
<PAGE> 2
NOW, THEREFORE, in consideration of the monies, mutual promises and mutual
covenants contained herein, the parties agree as follows:
1. Effective upon a date to be determined by the Chief Executive Officer,
but no later than March 8, 1999, EMPLOYEE will be relieved of his
responsibilities as Executive Vice President.
2. EMPLOYER shall pay EMPLOYEE a lump sum payment representing the amount
of EMPLOYEE'S unpaid but earned vacation time through March 8, 1999,
less all applicable state and federal taxes and other withholdings plus
those items identified as "Earned Compensation as of February 16, 1999"
on Schedule A attached hereto.
3. After EMPLOYEE is relieved of his responsibilities, EMPLOYER will pay
EMPLOYEE a lump sum payment representing any proper and reasonable
business expenses EMPLOYEE incurred prior to the date he is relieved of
his responsibilities. Said lump sum payment will be calculated pursuant
to applicable policies and procedures of EMPLOYER, provided that
EMPLOYEE submits an expense report not later than ten (10) business
days after the date he is relieved of his responsibilities. Said lump
sum payment shall be paid not later than ten (10) business days of
submission of an expense
4. In consideration of, and in exchange for: (a) EMPLOYEE's signing this
Agreement within twenty-one (21) days of February 16, 1999, without
revocation within the subsequent seven (7) day revocation period
described in Section 18; (b) EMPLOYEE's waiver and release of all
claims or causes of action against EMPLOYER, as set forth in Section 4
of this Agreement; (c) EMPLOYEE's agreement to the restrictions
contained in this Agreement ; (d) EMPLOYEE's covenant not to sue
EMPLOYER, EMPLOYER agrees to provide to EMPLOYEE the following:
4.1 Continued participation as an employee in EMPLOYER'S employee
welfare and retirement benefit plans, including but not
limited to participating in EMPLOYER'S flexible spending
account, and group health, dental, life and disability
benefits at such premium rates paid by other employees in
EMPLOYEE'S salary range by continuing to make any applicable
employee contributions through payroll deductions through
March 31, 1999.
4.2 Six (6) monthly payments in the amount of $18,750 per month,
to be paid at the end of each month beginning in April 1999
and continuing through September 1999, for a total payment of
$112,500, which represents an amount equal to one-half of
EMPLOYEE'S annual base pay at the time of termination.
<PAGE> 3
4.3 Payment in respect of 1500 units granted upon your hiring for
the 1997 cycle in the Long Term Incentive Plan of 1995, which
payment is scheduled for February 2000. The current estimated
value of those units is $633,759 less legally required
withholdings. The value of these units will be fixed following
the completion of the audit of the Company's 1998 earnings and
will be communicated to the EMPLOYEE immediately thereupon.
4.4 Payment into the Company's Savings and Profit-sharing Plan in
late March 1999 in respect of the profit-sharing contribution
attributable to 1998 financial performance.
4.5 Reimbursement of COBRA costs for the EMPLOYEE'S contribution
to the Company's COBRA eligible plans for a period of twelve
(12) months, beginning April 1999 and continuing through March
2000, unless employed and eligible for other group benefits
coverage prior to the end of March 2000.
4.6 Full executive outplacement services to be provided by DP
Baiocchi, Associates, Inc., a Chicago-based career and
outplacement counseling support services firm.
After March 31, 1999, the parties agree that EMPLOYEE shall not be
deemed an employee of EMPLOYER for any reason, including but not
limited to worker's compensation, benefits, and third party liability.
EMPLOYER agrees that it shall not contest any claim for unemployment
compensation benefits made by the EMPLOYEE with the Illinois Department
of Employment Security.
In the event of EMPLOYEE's death prior to March 8, 1999, the severance
payments that would have been paid to EMPLOYEE under Section 4 above
shall be paid to EMPLOYEE's beneficiary or estate.
EMPLOYEE acknowledges that the payments and benefits, described above
in Sections 4.1 through 4.6 are payments and benefits he would not
normally receive and are in full satisfaction and release of any and
all claims he has or may claim to have against EMPLOYER arising out of
his employment and/or his transfer to inactive employment status and/or
his termination from employment with EMPLOYER including any and all
claims for bonus, benefits or compensation.
5. EMPLOYEE, on behalf of himself and his heirs, executors,
administrators, attorneys and assigns, irrevocably and unconditionally
forever releases, discharges and covenants not to sue EMPLOYER, its
parent company, subsidiaries, divisions, and affiliates, whether direct
or indirect, its and their joint ventures, and joint venturers, its and
their successor companies,
<PAGE> 4
and all of its and their owners, shareholders, divisions, subdivision,
affiliates, assigns, agents, directors, officers, employees,
representatives, attorneys, and all other persons acting by, through,
under or in connection with them, and each of their respective
successors and assigns (hereinafter collectively referred to as
("Releasees"), from any and all known and unknown actions, causes of
action, claims, damages, punitive damages, suits, obligations,
agreements, attorneys' fees and any other liabilities of any kinds
whatsoever which have or could be asserted against EMPLOYER or
Releasees, arising out of or related to EMPLOYEE's employment with
and/or transfer to inactive employment status with and/or termination
and/or retirement from employment with EMPLOYER and/or any other
occurrence up to and including the date of this Agreement, including
but not limited to:
(a) claims, actions, causes of action or liabilities arising under
Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act, as amended, the Employee
Retirement Income Security Act, as amended, the Rehabilitation
Act of 1973, as amended, the Americans with Disabilities Act,
as amended, the Family and Medical Leave Act, as amended,
and/or any other federal, state or municipal employment
discrimination statutes (including, but not limited to, claims
based on age, sex attainment of benefit plan rights, race,
religion, national origin, marital status, sexual orientation,
ancestry, harassment, parental status, handicap, disability,
retaliation, and veteran status); and/or
(b) claims, actions, causes of action or liabilities arising under
any other federal, state, or local statute, law, ordinance or
regulation; and/or
(c) any other claim whatsoever including, but not limited to,
claims for severance pay, benefits, claims based upon breach
of contract, wrongful termination, defamation, intentional
infliction of emotional distress, tort, personal injury,
invasion of privacy, violation of public policy, negligence
and/or any other common law, statutory or other claim
whatsoever arising out of or relating to EMPLOYEE's employment
with and/or separation from employment with EMPLOYER or from
any other event to the date this Agreement, but excluding any
claims or actions which by law cannot be waived.
EMPLOYEE covenants and agrees never to institute any suit, complaint or
action, at law or in equity, in any court of the United States or any
state, county or municipality thereof or before any other tribunal,
public or private, against EMPLOYER or Releasees, or in any way
voluntarily to aid in the institution or prosecution of any suit,
action or claim of any kind, or any other kind of relief, arising from
any matter arising from his
<PAGE> 5
employment with EMPLOYER or any other occurrences to the date of this
Agreement, and hereby waives any right to recover any monetary relief
as a result of any such proceeding or any proceeding on his behalf.
EMPLOYEE further waives, releases, and discharges EMPLOYER and
Releasees from any reinstatement rights which he may have or could have
and agrees not to seek employment with EMPLOYER and/or any of the other
Releasees. EMPLOYEE acknowledges that he has not suffered any
on-the-job injury for which he has not already filed a claim.
EMPLOYEE specifically acknowledges and agrees that this release and
covenants not to sue is made voluntarily and knowingly and without any
duress or coercion of any kind. The release is not intended to waive
claims or rights which by law cannot be waived, including the right to
file an administrative charge of discrimination, nor is it intended to
waive any claims alleging a violation of the Agreement by EMPLOYER.
EMPLOYEE FURTHER UNDERSTANDS THAT THIS RELEASE AND COVENANT NOT TO SUE
INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
In the same manner, Releasees waive any and all claims against EMPLOYEE
for EMPLOYEE'S actions KNOWN to any Executive officers, as defined by
the SEC, of Chicago Title Corporation on the date hereof and covenant
not to sue EMPLOYEE for any said actions.
6. EMPLOYEE agrees that he will cooperate fully and lend reasonable
assistance to EMPLOYER and any of its employees, officers, or agents
with regard to any measures of company matters with which he was
involved or had knowledge about or interest in and that he will be
available for consultation with EMPLOYER during the period from the
date EMPLOYEE is relieved of his responsibilities until February 29,
2000 at such reasonable times mutually agreed upon by EMPLOYER and
EMPLOYEE. EMPLOYER shall reimburse EMPLOYEE for reasonable expenses
incurred in connection with such consultation upon submission by
EMPLOYEE of proof of same.
7. EMPLOYEE acknowledges and agrees that during the time of his active
employment, he advised and worked on matters involving EMPLOYER which
may result in controversy, dispute or litigation. With respect to such
transactions, and any other matters in which he may become a witness
for EMPLOYER or may otherwise be required to participate in claims or
litigation with respect thereto, EMPLOYEE agrees that he will fully
cooperate with and lend reasonable assistance to EMPLOYER at all times
after signing this Agreement, including, but not limited to,
investigation, preparation and assistance in defending or prosecuting
any claims, as well
<PAGE> 6
as appearance on EMPLOYER's behalf at trial, or otherwise. EMPLOYER
shall reimburse EMPLOYEE for reasonable expenses incurred in connection
with such cooperation and assistance upon submission by EMPLOYEE of
proof of same. If such assistance is required after February 29, 2000,
EMPLOYER shall also reimburse EMPLOYEE for EMPLOYEE'S time spent at a
rate of $200.00 per hour.
8. EMPLOYEE agrees not to directly or indirectly through employment or
association with any other person or company, solicit the employment or
engagement of any employees or agents of EMPLOYER or any of its
subsidiaries for two years after termination of employment and EMPLOYEE
will not, at any time, disclose any confidential information of
EMPLOYER or its subsidiaries. In addition, EMPLOYEE will not solicit ,
directly or indirectly, any person or company with whom EMPLOYEE or his
direct reports had any communications on behalf of EMPLOYER, for any
business within the title insurance business, or title related
businesses, of EMPLOYER or any of its subsidiaries for one year after
any termination of employment. However, at any time following
termination by EMPLOYER, EMPLOYEE may elect to waive further payment of
all severance benefits in Section 4 and, in return for that waiver, be
released from this covenant not to compete.
9. EMPLOYEE agrees that he will not any time disparage or defame the
EMPLOYER, or any subsidiary or affiliate thereof, or any of its
services, or any of its officers, directors, employees, or agents, to
any current or future or past employees, customers, clients, vendors or
suppliers of EMPLOYER and EMPLOYER agrees that it will not any time
disparage or defame the EMPLOYEE.
10. Letter of Recommendation. All oral inquires from prospective employers
or others seeking references regarding EMPLOYEE shall be directed to
the Director of Human Resources of EMPLOYER and shall be responded to
as follows:
" We would be pleased to provide you with a reference regarding Mr.
Keller. However, it is the policy of Chicago Title and Trust Company
that all reference requests be submitted in writing. Please send your
request to Chicago Title and Trust Company in care of the Director of
Human Resources and we will provide you with a letter of reference
promptly".
Upon receipt of such and all other written requests, EMPLOYER shall
provide a mutually agreeable letter of reference in the form attached
as Exhibit B hereto.
11. EMPLOYEE agrees to keep the terms, conditions and amount of payments of
this Agreement completely CONFIDENTIAL and will not
<PAGE> 7
hereafter disclose any information concerning this Agreement to anyone,
except that EMPLOYEE may discuss this Agreement with his attorneys,
accountants, financial advisors and his family, but on the condition
that any disclosures or breach of confidentiality by said attorneys,
accountants, financial advisors, or his family; and with respect to
Paragraph 8 only, prospective employers and employment advisors.
EMPLOYER agrees to keep the terms, conditions and amount of payments of
this Agreement completely CONFIDENTIAL and will not hereafter disclose
any information concerning this Agreement to anyone, except that
EMPLOYER may discuss this Agreement with its senior management
employees, human resources employees and attorneys who have a need to
know if its existence.
12. As a material part of this Agreement, EMPLOYEE agrees to the following:
12.1 Definition of Confidential Information. For the purposes of
this Agreement, the term "Confidential Information" shall
mean, but shall not be limited to, any technical or
non-technical data, formulae, patterns, compilations,
programs, devices, methods, techniques, processes, procedures,
improvements, manuals, financial data, lists of actual or
potential customers or suppliers of EMPLOYER, and any other
information regarding EMPLOYER's business that is not
generally known to the public through legitimate origins.
EMPLOYER and EMPLOYEE acknowledge and agree that such
Confidential Information is extremely valuable to EMPLOYER and
shall be deemed to be a "Trade Secret ". For the purposes of
this Section 12.1, such information is "not generally known to
the public through legitimate origins" if it is not generally
known to third parties who can obtain economic value from its
disclosure and use.
12.2 Non-Disclosure of Confidential Information. EMPLOYEE will not,
in any form or matter, directly or indirectly, divulge,
disclose or communicate to any person, entity, firm,
corporation or any other third party, or utilize for
EMPLOYEE's personal benefit or for the benefit of any
competitor of EMPLOYER, any Confidential Information, unless
such disclosure is compelled by judicial or administrative
process.
12.3 Delivery Upon Termination. EMPLOYEE will promptly deliver to
EMPLOYER all correspondence, manuals, letters, notes,
notebooks, reports, programs, plans, proposals, financial
documents, or any other documents or things concerning
EMPLOYER's customers, supplier network, marketing strategies,
products or processes and/or which contains Confidential
Information. Without limitation to the forgoing, EMPLOYEE
shall
<PAGE> 8
not be entitled to retain any Confidential Information in any
form, including electronic files, magnetic media or optical
media.
13. Because of the EXTREME CONFIDENTIALITY and SENSITIVITY of this
Agreement and its terms, EMPLOYEE further acknowledges and agrees that
his breach of any of the covenants and agreements contained in this
Agreement will result in IRREPARABLE INJURY to EMPLOYER for which there
may be no adequate remedy at law. In the event of the breach or
threatened breach of any of the restrictions, covenants or agreements
in this Agreement by EMPLOYEE, EMPLOYER shall be immediately entitled
to injunctive relief, both preliminary and final, enjoining and
restraining such breach or threatened breach. Such remedy shall be in
addition to all other remedies available at law or in equity. Such
injunction shall be available to EMPLOYER without the posting of any
bond or other security and EMPLOYEE hereby consents to the issuance of
such injunction.
14. EMPLOYEE further agrees that on the effective date he is relieved of
his responsibilities with EMPLOYER, he will have delivered to EMPLOYER
all customer or client lists, financial analyses, price information,
documents, strategic plans, manuals, letters, notes, notebooks,
reports, and any copies thereof, as well as any and all other
confidential or proprietary information and any and all other
materials, supplies, documents, information or equipment that he may
have in his possession or under his control belonging to EMPLOYER, as
defined in Section 12, above.
15. All parties further agree that any provision of this Agreement that may
at any time be prohibited or unenforceable by law shall be ineffective
only to the extent and for the duration of such prohibition or
unenforceability, and that any such prohibition of unenforceability
shall not invalidate the remaining provisions of this Agreement.
16. The Agreement shall be binding upon EMPLOYEE and EMPLOYEE's heirs,
administrators, representatives, executors, successors, and assigns,
and shall be binding on EMPLOYER and its successors and assigns.
17. EMPLOYER denies that it has taken any improper action against EMPLOYEE
in violation of any federal, state, or local law or common law
principle. Both parties further agree that this Agreement shall not be
admissible in any proceeding as evidence of any improper action by
EMPLOYER (except to enforce to the terms thereof).
18. EMPLOYEE agrees that he is entering into this Agreement voluntarily and
with full knowledge of its significance. EMPLOYEE further acknowledges
that this Agreement sets forth the entire agreement of parties and it
shall
<PAGE> 9
be final and binding as to all claims of causes of action which have
been or could have been advanced on behalf of EMPLOYEE against
EMPLOYER, and/or any other as set forth above, arising out of his
employment and/or his transfer to inactive employment status and/or his
termination and/or his voluntary resignation of employment with
EMPLOYER.
19. EMPLOYEE acknowledges and agrees that he has been advised (a) of his
right to consult with an attorney as to the significance and meaning of
this Agreement; (b) that he has twenty-one (21) days to consider this
Agreement and seven (7) days after he executes it to revoke; (c) that
if EMPLOYEE wishes to revoke this Agreement he must forward his timely
written revocation to Ms. LaNette Zimmerman, at Chicago Title and Trust
Company, 171 North Clark Street, Chicago, Illinois 60601; and (d) that
this Agreement is executed without reliance upon any other statement or
representation of the parties released.
20. The parties agree that his Agreement shall be interpreted and governed
by the laws of the State of Illinois.
THIS AGREEMENT sets forth the entire Agreement of the parties and shall be final
and binding as to all claims, allegations, charges, and causes of action which
have been or could have been advanced or raised on behalf on EMPLOYEE arising
out of his employment and/or his transfer to inactive employment status and/or
his termination and/or his retirement from employment with EMPLOYER.
AGREED TO BY: AGREED TO BY:
By: Chicago Title & Trust Company By: /s/ Michael J. Keller
----------------------------- -------------------------------
Chicago Title Corporation
-----------------------------
Name: S. LaNette Zimmerman Name: Michael J. Keller
----------------------------- -------------------------------
Title: Senior Vice President Title: Executive Vice President
----------------------------- -------------------------------
Dated: 03/08/99 Dated: 03/08/99
-------- --------
<PAGE> 1
Exhibit 10.1(b)
List of Contents of Exhibits to the Agreement
Exhibit A Earned Compensation as of February 16, 1999.
Exhibit B Letter of reference.
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CHICAGO
TITLE CORPORATION'S CONSOLIDATED BALANCE SHEET AT 03/31/99 AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE 3 MONTHS THEN ENDED. (IN THOUSANDS, EXCEPT PER
SHARE DATA)
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<DEBT-HELD-FOR-SALE> 1,026,626
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 35,048
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 1,061,874
<CASH> 244,086
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 1,955,626
<POLICY-LOSSES> 631,190
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 21,467
0
0
<COMMON> 21,830
<OTHER-SE> 445,895
<TOTAL-LIABILITY-AND-EQUITY> 1,955,626
471,610
<INVESTMENT-INCOME> 16,607
<INVESTMENT-GAINS> 1,034
<OTHER-INCOME> 0
<BENEFITS> 29,817
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 424,494
<INCOME-PRETAX> 35,140
<INCOME-TAX> 11,951
<INCOME-CONTINUING> 23,189
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<NET-INCOME> 23,189
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<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
